Congress Fails to Renew Key International Program for Small Business
Congress has left for its summer recess without renewing the charter of the Overseas Private Investment Corporation, a federal agency that has become a unique and powerful backer of smaller companies in international trade.
OPIC’s authority to finance international transactions expired in April. With the additional delay caused by Congressional inaction, the agency is no longer able to finance new transactions.
Ironically, OPIC had become one of the federal government’s signature success stories in helping smaller American companies flourish in international trade.
Ten years ago, OPIC had no dedicated small business underwriters or small business office. Its handful of small business transactions had an annual value of $10 million or less.
Today, most of OPIC’s underwriters work for the agency’s innovative new Small and Medium Enterprise Finance Department. About 90% of the agency’s transactions are with SME’s, and the value of those transactions has soared to over $500 million annually.
Recently, OPIC opened up a new network of loan originators to expand the agency’s reach across the country. It also created a new $100 million fund dedicated exclusively to underwriting international transactions by U.S. small businesses.
No other agency in Washington has done so much in so short a time to help finance American small businesses in international trade.
OPIC has done all this while meeting a series of challenges:
o The agency is required to carefully assess market risk in the emerging market economies where it is active and to avoid transactions that look too shaky.
o It must also make sure that each project it finances helps support economic development in the target country.
o It seeks projects that would help build up small businesses abroad and that are fully sustainable economically and environmentally.
o It must weigh whether the project would otherwise be financed by the private sector, and if so, it must decline to participate.
o And it must insist on employment benefits in the U.S. as well as abroad.
OPIC has not only done all this, but done it at no net cost to American taxpayers. In fact, the agency returns money to the U.S. Treasury each year.
This year, OPIC’s charter renewal passed the relevant Congressional Committees by wide margins and was overwhelmingly approved by the U.S. House of Representatives.
In the Senate, however, the bill got tangled up in a series of mostly unrelated disputes about other issues that the Senate was considering.
When Congress returns in September, SBEA will be supporting renewed efforts to get OPIC reauthorized. We hope that the valuable work of this agency will be permitted to continue.